To identify true growth opportunities, investors must consider how companies are using AI to revolutionize the treatment journey. Some companies are doing just that via Software as a Medical Device (SaMD), particularly by developing prescription digital therapeutics (PDTs).

By DAVID B. KLEIN
The excitement around artificial intelligence has been palpable for some time, dominating industry discussions and mobilizing capital for investment opportunities, but as of late, there’s been a change in the air. The optimism that reached a fever pitch in the first half of the year has dissipated. Now begins the hard work of sorting through what it all means.

As the healthcare industry responds to the burgeoning opportunities AI presents, especially in developing new, more effective therapeutics and enabling access to treatment, it’s critical that investors prioritize proof over positivity. They must determine if a company’s AI strategy will lead to a high return on investment, or if it is simply a flashy rebranding of business-as-usual.

Let’s consider pharmaceutical companies moving into AI. Investors evaluating this space should answer three questions: Is the company integrating AI into their area of greatest expertise, the development of treatments? Will their approach provide true differentiation? And, once the approach is defined, is the company dedicating the right resources to unlock the full value of AI? Answers to these questions are essential to identifying which companies will succeed in accelerating growth through AI.

Many pharmaceutical executives aim to be at the forefront of AI innovation and will look for ways that SaaS (software as a service) solutions can improve their agility and grant operational efficiencies. And AI advancements that shorten therapeutic development timelines or introduce new drug discovery opportunities will be critical for future-proofing businesses; these are core to pharma’s area of expertise. However, as others adopt similar solutions, this will become par-for-the-course. Although these advancements will help shape the future of pharma, they alone will not help a company cement its industry leadership or leapfrog the competition.

To identify true growth opportunities, investors must consider how companies are using AI to revolutionize the treatment journey. Some companies are doing just that via Software as a Medical Device (SaMD), particularly through development of prescription digital therapeutics (PDTs). These programs, especially the next generation of PDT 2.0 that deploys AI, gather data and insights to personalize each patient’s treatment journey to improve outcomes on an adaptive basis, building a relationship with the patient while delivering a new source of clinical value.

Other AI-based products in healthcare are typically about applying AI to existing challenges. PDTs are not. They create new territory for AI, pioneering fresh categories of value creation within healthcare, which are the opportunities investors should target. In my own work, I have long advocated for PDTs and the value they can bring to patients and to pharma. In particular, I see the value pharma companies accrue when they approach PDTs to benefit their core domain, treatment.

By building longitudinal, complex relationships directly with patients, PDTs generate novel experiences, datasets and insights not otherwise accessible in today’s healthcare system, offering fertile ground for AI to thrive and create tomorrow’s care paradigm. PDTs achieve this through three key value-adds.

The first is by being a patient-facing care partner. While most AI solutions work behind the scenes or offer transactional task-driven interactions with patients, such as appointment scheduling or patient education, PDTs are optimized for user experience and interact with patients in a meaningful way. PDTs are designed for regular use in treatment courses of at least six weeks and up to 24 weeks or more, including some PDTs for chronic use, during which they uniquely “get to know” the patient and deliver personalized treatment. This partnership with the patient directly supports persistence on treatment and holistic care, improving real-world, long-term outcomes.

Another value-add is rich, longitudinal datasets. Patients indicate they’re willing to share their anonymized personal health data to help other patients, but generally, they only volunteer their data when they get value in return. PDTs deliver that value, providing personalized care while generating a breadth of data on digital biomarkers, medication history, smartphone interactions, and more over the duration of treatment. These high quality datasets can unlock insights, including real world evidence of drug benefits and identification of new therapeutic targets.

Finally, PDTs provide real-time, precision care. AI gets better at what it does, quickly. PDTs get more effective as they interact with patients over time, allowing for discovery and validation of digital biomarkers, which can be prognostic, diagnostic, or predictive. Uniquely, PDTs can offer ‘closed-loop’ therapy; they are both the point of assessing patient needs through ecological momentary assessments and digital biomarkers, as well as the point of care that integrates those findings into personalized, precise care. These insights are not limited to application within the PDT; the data PDT’s gather can unlock new clinical treatment protocols, new medication dosing guidelines, and more.

The value of these opportunities is evident, but vision alone, as any investor knows, is not enough. To realize this value, companies must commit meaningful resources commensurate with the opportunity. PDTs will only deliver value when they undergo drug-like development processes that meet the needs of the larger healthcare system. Because PDTs are regulated, the data they gather are reliable and enjoy the safeguards that result from FDA oversight and clinical validation, providing assurance to patients and providers that AI is being responsibly deployed.

Further, recent FDA guidance states that when SaMD in combination with a drug demonstrates additional clinically meaningful benefit, that added benefit should be included on the drug’s label. This differentiates evidence-based products like PDTs, which will be included on a drug’s label, from companion apps, which FDA indicates should only be represented in marketing materials. This affirms PDTs can unlock new categories of value within healthcare, while also being the regulated, trusted locus of AI.

In examining AI’s merits and applications, investors must look past the hype. Those considering where to invest should require evidence that companies have strong answers to how they are addressing the clear and immediate opportunities of AI and pursuing new categories of value unlocked by AI. Those who can envision it, and invest the resources to create it, will be at the forefront of leading the AI-enabled patient journey of the future.